In a recent landmark judgment, the Delhi High Court, in the case of M/s. Att SYS India Pvt. Ltd. Estex Tele Pvt. Ltd. Consortium v. Commissioner of Goods and Service Tax [W.P. (C) 14494/2023 dated November 20, 2023], has granted relief to the petitioners, directing the Revenue Department to reinstate their GST registration. The court ruled that the cancellation of GST registration without affording the petitioner a proper hearing and providing adequate reasoning is not sustainable.
Background:
M/s. Att SYS India Pvt. Ltd. Estex Tele Pvt. Ltd. Consortium, hereinafter referred to as “the Petitioner,” is an Association of Persons formed by ATT SYS India Pvt. Ltd. and Estex Tele Private Limited. Their collaboration aimed to fulfill a contract awarded by the Indian Highway Management Company Limited for conducting traffic surveys on National Highways. The Petitioner had been duly registered under the GST Act in the year 2017.
The contractual engagement with the Company was prematurely terminated, leading to the initiation of arbitration proceedings. The Arbitral Tribunal subsequently directed the Company to make payments to the Petitioner. As the Petitioner was not involved in any other business, it consistently filed Nil returns. Following receipt of the awarded amount, the Petitioner discovered the cancellation of its GST registration through an order dated December 26, 2020, by the Revenue Department. Consequently, the Petitioner faced impediments in filing GST returns and had also remitted GST in excess of Rs. 14.90 Lakhs.
Legal Issue:
The central question before the court was whether the cancellation of GST registration, undertaken without providing a hearing and sufficient reasoning, could be deemed legally sustainable.
Court’s Decision:
The Hon’ble Delhi High Court made the following key observations and rulings:
- Absence of Opportunity for Hearing: The court highlighted that the Show Cause Notice (SCN) lacked any mention of the date and time for a personal hearing. Consequently, the Petitioner was denied the opportunity to contest the SCN, a clear violation of the principles of natural justice.
- Lack of Reasoning in the Impugned Order: The court noted that the order leading to the cancellation of the Petitioner’s GST registration was devoid of reasoning and failed to establish any grounds justifying such cancellation. This absence of substantive reasoning rendered the Impugned Order arbitrary and against the principles of natural justice.
- Violation of Natural Justice: The court opined that the cancellation of GST registration, as per the Impugned Order, was void and had been passed in contravention of the principles of natural justice. It emphasized the significance of providing a fair opportunity to be heard before any adverse action is taken.
- Order Set Aside: Concluding that the Impugned Order was unsustainable, the court set it aside. As a result, the Writ Petition filed by the Petitioner was allowed.
- Restoration of GST Registration: The court directed the Revenue Department to restore the Petitioner’s GST registration promptly. Additionally, the Petitioner was instructed to comply with statutory provisions by filing returns in accordance with the law.
This judgment by the Delhi High Court reinforces the importance of adherence to principles of natural justice in administrative proceedings, particularly in matters involving the cancellation of GST registration. It serves as a significant precedent in protecting the rights of entities against arbitrary administrative actions and underscores the need for a fair and reasoned decision-making process.
